UNIT 4

Economic systems

LEARNING OBJECTIVES

After studying this unit, you should be able to:

• examine topics and subtopics related to the notion of economic system, traditional economy, command economy, market economy, mixed economy, profit motive and private property;

• outline the main characteristics of each economic system;

• state the role of government in a command economy;

• define the main economic and social goals;

• identify the main characteristics of a free enterprise economy;

• define the notions of economic freedom and efficiency, economic equity, economic security, economic growth and price stability;

• apply reading skills to comprehend, analyze and interpret texts related to the different types of economic systems;

• give spontaneous and prepared monologs, dialogs and group interaction using topical vocabulary;

• summarize, annotate, render and translate texts related to the issues covered in the unit.

Lead-in

Exercise 1

1. Split into group of four. Each group will enact the activity of participants in an economic system.

The initial resources each group has are 1 pen, 1 marker, three pieces of paper, a pair of scissors.

2. Do the following activities in each group:

1. Make a decision about what good to produce with your resources.

2. Make one prototype of this good. How did you organize the production process?

3. Take 5 minutes and as much paper as you need to produce as many items of your good as possible.

4. Are these produced goods enough for all your group mates? Decide who of your group mates will get one? Why have you chosen them?

3. Answer the questions:

1. What three questions did you have to answer while doing the activity?

2. How were they answered in each group?

3. Are the answers the same?

Key terms

1. Study key terms and their definitions before reading Text A & B:

Economic system - економічна система - organized way in which a society provides for the wants and needs of its people

Traditional economy – традиційна економіка - economic system in which the allocation of scarce resources and other economic activities are based on ritual, habit or custom

Command economy – командна економіка- economic system with a central authority that makes the major economic decisions

Market –ринок - meeting place or mechanism that allows buyers and sellers to come together

Market economy – ринкова економіка - economic system in which supply, demand, and the price system help people make economic decisions and allocate resources

Mixed economy – змішана економіка - economic system that has some combination of traditional, command and market economies

Free enterprise economy – економіка, що ґрунтується на вільному підприємництві - capitalistic economy in which competition is allowed to flourish with a minimum of government interference

Private property – приватна власність - the right of individuals and businesses to own the means of production

Profit – прибуток - extent to which persons or organizations are better off financially at the end of a period than they were at the beginning profit motive

Competition – конкуренція - the struggle among sellers to attract consumers

Business – бізнес - an organization or enterprising entity engaged in commercial, industrial or professional activities

Capitalism – капіталізм - economic system in which private citizens own and use the factors of production in order to generate profits

Socialism – соціалізм – political and economic system in which the government owns and controls some factors of production

Communism – комунізм - economic and political system in which all factors of production are collectively owned and controlled by the state

Inflation – інфляція - rise in the general level of prices